Markets sink 4 % in painful week on global massacre

Tumbling trend continued on the Dalal Street for fourth week due to panic selling among the investors on concerns of global recession and sovereign debt crisis in Europe

Major news for the week

July inflation at 9.22% versus 9.44%

IT shares take heavy beating on US recession fears

RBI expects GDP growth at 8% to tame inflation

Educomp Solutions tumbles on I-T raid

DLF plunges as CCI imposes penalty



Indian indices

Bears were getting stronger, with the Indian markets on a downtrend for the fourth consecutive week. Nervous investors removed money from equities on concern that the US may enter into a recession and as an intensifying European debt crisis evoked memories of late 2008, when credit markets froze after Lehman Brothers Holdings Inc. collapsed.

Lingering worries about a slowdown in India's economic growth and profitability of domestic companies due to surging interest rates in Asia's third-largest economy also weighed on investor sentiment. The European crises as well as US debt issues and also a major political mess going around back home were creating panic among investors. Massive sell-off by the foreign institutional investors ( FIIs) on global growth worries led to a major fall in the Indian markets. Without the active participation of FIIs, it is difficult for the market to rise. The Indian markets joined the worldwide carnage and fell in three out of four trading sessions in truncated week.

The Sensex oscillated 1048 points between a weekly high of 17035 and a weekly low of 15988 while the Nifty swung 336 points between a weekly high of 5132 and a weekly low of 4796. The Sensex slipped below the 16000 mark and the Nifty fell below the 4800 level for the first time since May 2010. Wrapping off the week, the Sensex lost 4% or 698 points at 16142 and the Nifty dropped 4% or 227 points at 4846.

Sectoral and stock screening

It was a bear market as all the sectoral indices closed the week on a negative note. BSE Bankex was the worst performer of the week, down by 7.51% followed by BSE Realty down by 7.36% and BSE Information Technology (IT) declined by 5.33%. Rest of the sectors closed lower between 0.25-5.18%.

Looking into 'A' group stocks, Jubilant Foodworks was the top gainer of the week rising by 9.74%, followed by Hero MotoCorp up by 5.44% and Dabur India surged by 2.67%. Top three losers of the week - Educomp Solutions fell by 23.37%, BF Utilities slipped by 21.04% and Jet Airways was down by 20.91%.

FII/MF activity

The FIIs have been ploughing back their hot money from the Indian markets following sell-off in global equities. The FIIs remained net sellers for the third consecutive week in August and sold Indian equities worth a net of Rs1,022.2 crore as against net sell of Rs4,337.1 crore seen in the previous week. The local investors remained buyers for the third straight week in August and bought Indian equities worth a net of Rs55.9 crore as compared to net buy of Rs1,288.9 crore seen in the previous week.

Global indices

The global stocks were hammered on worries over US recession and European lenders facing short-term funding strains. Dax100 was the biggest loser of the week, down by 8.63%. Following that Nasdaq fell by 6.62%, CAC40 declined by 6.13%, FTSE 100 slid by 5.25% and the Sensex dipped by 4.14%.

Outlook

In the coming week, the market may witness volatility, as the traders will rollover positions in the derivatives segment from the August 2011 series to the September 2011 series. The near-month August 2011 derivatives contracts will expire on Thursday (August 25, 2011). The market may continue to be in bearish trend and more downside is expected until definite signal on how the US and European situation would be resolved. The FII activity and global economic data will also decide the future path of the market.